New Suit Challenges Baseball’s Antitrust Exemption

Lawyers representing four of the 40 minor league franchises that lost their affiliations with major league teams last year are hoping they have the right case to bait the Supreme Court into ending that exemption once and for all, reported The Washington Post.

Lawyers representing the Staten Island Yankees and three other teams filed a lawsuit to the US District Court in the Southern District of New York in late December. In the suit, they argue that Major League Baseball’s (MLB) decision to end big league affiliations with those minor league clubs represents anti-competitive behavior in violation of the Sherman Antitrust Act — collusion on the part of MLB and its member organizations to eliminate the free market’s role in determining which franchises survive and which do not.

About 99 years and seven months ago, Supreme Court Justice Oliver Wendell Holmes and his colleagues issued a ruling that would shape professional baseball in the United States for the next century.

In a now infamous case most often referred to as “Federal Baseball,” the court ruled that professional baseball was exempt from the Sherman Antitrust Act passed three decades earlier, which meant teams could collude to suppress wages and dictate the fortunes of member clubs in ways that would be illegal in other big business spheres.

No other professional sports league was ever granted the same exemption, and the Supreme Court has more than once referred to that Holmes decision as one it would not make again.

Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.